Managing a business effectively, efficiently, and innovatively is an art, and we discuss how to make that happen here. In this space, we discuss the methods, tools, techniques, and tips for making your business thrive, from initial planning to redesign and reinvention. The discussion is open, the topics varied, and the opportunities to learn can be endless. Enjoy!

Ethics

12/18/2017

A few evenings ago, i happened to be at home with no papers to grade or projects to review, and put on Public Broadcasting. It just so happened that one on my favorite Agatha Christie novels was being televised, Body in the Library, and I knew that would be the main event of the evening.

As I watched movie, a British version by their equivalent of PBS, it came to me that the genius of Dame Christie was not limited just to murder and mayhem; he also provided some subliminal messages to the audience that many of us in the business world could easily adopt ourselves. let me suggest just a few for discussion here.

First, never jump to conclusions before you have a reasonable set of facts.Miss Marple, the amateur criminologist, will get you every time. In this case, while it was clearly murder from the outset, and Dame Christie provides a complex set of circumstances that keeps you bouncing between characters, nearly until the ending, when suddenly all becomes clear.

Unfortunately, in much of society, people pick up strands of data, not even information really, and quickly 'decide' the result. Usually, they are wrong, but they have done so much damage to themselves and their reputation, and to others that regardless of the outcome, people are scarred unnecessarily. First impressions can be a hypothesis to be proven (or dis-proven) but they should not be the sole factor in decision-making.

Second, make sure you truly have facts and not simply plausible conjecture.Inspector Slack, the intrepid detective in the novel, has the reputation for looking twice at everything, and then searching again to prove or disprove what is before him. That riles his superiors, and confounds his associates sometimes, but it leads to good decisions. In our world of communications and technology, what seems to be happening might be something completely different. How many never check resumes of prospects, or 'think' someone is the 'expert' in an area, and move forward, only to find they were completely wrong in their approach? Assembling data still makes it data--it is the context that transforms it into information, which must them be checked for authenticity, applicability, and reality. All too often, each of us has skipped those steps and paid the price.

Third, when you are too close to something, recognize it and step back. One of the things I like about this novel is that it is set in the countryside in England, where people who live on the nearby properties are your friends, neighbors, and often professional associates. The Chief Inspector lived next to the prime suspect ( they are both retired colonels) and both active in the administration of the district. The Chief Inspector logically would like to prove that his friend is not involved in the murder. he accepts his word for it, and then actively steers the investigation away from him, in any way he can, including taking every step of the investigation with his subordinates.

Logic should say that you trust your associates and subordinates to good the job expected on them. If you do not have trust, you do not have a team--you do have a group which happens to be in the same place at the same time, but working to different objectives. Leadership often gives way to mentorship in situations where you either have a personal interest or some other conflict that ought to ring bells to say--STAY AWAY FROM HERE. That does not mean to put up a wall so high you cannot provide oversight; it does mean that you trust the judgement of others that they will bring the truth to you.

Finally, teams get answers, not groups working discordantly. Working through issues with each member of the team providing their expertise provides much better answers than a kluged together supposition based on little or no facts. Put the people in charge who know how to get those answers; let them lead the group as you become their mentor. A good leader does not always have to be 'in charge'. A good leader does have to engender respect, provide mentorship, and be ready to assist where needed to achieve the desired result. Most efforts, however are team efforts, not solo efforts.

One additional comment here. Look for the Miss Marple's of the world; those with an immense knowledge base that can provide observations and answers where none seem to be present. These people are not usually out in front leading, they are more generally in the background and hard to find. if you do find one, you have a jewel that will light the way to success.

Bottom line here: Sometimes a good detective story shows you the way to solve difficult problems, even if they do not involve murder or mayhem.

05/10/2016

Some form of sabotage exists in most companies; much of it relatively benign, but some amount causes real damage, economically and administratively for management. I began thinking about that topic some weeks ago, during a discussion over lunch with several professional friends, one of whom was involved in trying to develop a company policy designed to reduce or prevent sabotage, at their request.

My concern was that it seemed to me to be virtually impossible to prevent all but the most egregious forms of sabotage, especially that which is inadvertent, coming from someone with no real axe to grind or animosity for anyone. There are always people who sometimes disagree with decisions, but ‘agree to disagree’ and simply move on. There are others who let those decisions with which they disagree become subconscious irritants, which can reduce productivity, and create untoward results.

Among the small group, we were pretty much agreed that there were no hard-and-fast rules, that a great deal depended on hos decisions are made in the organization, and how inclusive management is in getting input and feedback on changes to policy and procedure. We left it at that, and our associate went back to his work after lunch probably thinking he still did not have a good approach for his task.

Then I read an article in the recent issue of Workforce Magazine, found the digital copy of the article and sent it to my friend. In the article by Bob Frisch, Rob Gifford, and Cary Greene, titled, “Sabotage in the Workplace is an Inside Job,”, these amazingly thoughtful writers described how they discovered an old World War II-era publication from the Office of Strategic Services (OSS – Now the Central Intelligence Agency (CIA)) with a set of eight (8) tactics for encouraging (believe it or not) sabotage in the workplace. Most of these tactics are what we still see today. They are:

Insist on doing everything ‘though channels’ – Always follow the chain of command to the letter, and you will always be ‘correct’.

Make Speeches – Be an active debater, orator, and stump speaker every chance you get, and use a lot of time to prevent decisions

Refer matters to committees or working groups whenever possible to delay decisions even further

Bring up irrelevant issues whenever possible

Haggle over precise wording on communications, minutes, and resolutions

Refer back to matters discussed and decided previously to attempt to reopen those discussions

Always advocate caution and reasonableness as well as avoiding haste in decision-making

Engender a sense of ‘worry’ about any decision. As the authors say, ‘Raise the question of whether such action as is contemplated is within the jurisdiction of the group,’ or whether it might conflict with some higher policy or decision.

In short, make it as hard as possible to make decisions and execute them. Active saboteurs will use these tactics every chance they get, but they still seem to be publicly supporting the effort, just ‘cautious.’

The inadvertent or innocent saboteur may not realize that their ‘conservative’ approach is actually gumming up the works for others. They may have honest principles which they use to base their questions and opposition. It can be difficult to separate the innocent saboteur from those who are knowingly trying to prevent action. The article discusses several approaches to reducing occurrences. It is a great read, and my associate, after receiving it felt a lot more secure in recommending policies and practices to his client. You just might find the same.

04/28/2016

This is one of the first Case Studies we will use in the Fall Semester. Volkswagon is considered one of the premier companies in the world, yet it still succumbed to a major ethical crisis on its odometer reading scandal. Read it here: https://genehughson.wordpress.com/2016/04/24/volkswagen-and-the-cost-of-culture/

04/21/2016

The founding fathers were collectively a group of very smart men. They understood that their life depended on their decisions, and they were not afraid to make decisions based on their best knowledge and experience. What they often had, though was a good sense of ethics and virtue and the willingness to consistently display those attributes during even the most trying times.

I found a recent article by Ava Ralph of the Professional Biz Blog, which points out five of the fundamental leadership questions and concerns which face all of us who choose to take management position, and what they did to solve their problems using these principles. It is well worth read. You can find the original article here.

02/18/2016

Developing, and then maintaining ethical practices in the workplace is not just a matter of announcing expected behaviors and trying to enforce them. People generally do not react well to arm-twisting or threats--instead they leave. if they are valued employees, it is the company or agency that loses, not the employee; who will often quickly find employment elsewhere.

In my mind, there are three perspectives to the answer to this question.

First, You have to have a program in place which defines the vision, ethically and culturally, that the employees know exists, and also know how they are expected to comply. That in itself can be a difficult task. It is more than simply putting up signs with trite slogans or lists of 'You musts...'. it must be clear, in language they understand, communicated to then, along with the importance of compliance, and reinforced periodically to ensure that behavior continues to meet expectations. You do not need a club to enforce expected behavior. What you need is the cooperation of employees, demonstrations that management follows the same rules, and assurance that the rules are enforced equally and fairly.

Second, expected outcomes in terms of behavior must be as important as productivity. Too many firms place more attention on productivity--its impact on the bottom line, and its influence over executives and shareholders. The result all too often is slippage in quality of work--products or services--all designed to overlook 'minor' flaws so that numbers meet expectations. When reduced quality is know by management, but not corrected, employees see that behaviors and expectations are not longer as critical and their work quality level is not important.

Similarly, when employees are criticized for work habits, but supervisors and managers seem to be living under differing rules, employees will eventually expect that they also can live under different rules. When this happens, further slippages will occur, and eventually major problems surface which management had not expected.

Third, behavior needs to be monitored, expectations reinforced, and unacceptable behavior needs to be corrected. There are two sides to this situation. Management should not be seen simply as a punisher; rather, enforcement of values and behaviors should be evenly enforced. Positive reinforcement should accompany good work. it costs nothing but time to tell an employee or a group that their work is well-done. Simple awards, group reinforcement, and sometimes nothing more than a thank you will provide the stimulus for people to work harder, and at a higher quality level.

Conversely, When something does go wrong; when work is shoddy and not up to expected standards, corrective action needs to be taken, privately if possible, but taken in a way that employees understand that bad work is not acceptable. This applies to both lower level personnel and supervisors or managers. Consequences should be clearly outlined and explained to employees with periodic meetings, communications, or counseling sessions. Critical behaviors should be included in evaluation processes and during considerations for pay adjustments.

Creating and then maintaining programs designed to instill ethical, value-based behaviors in the workplace are not done in a vacuum, or informally. The organization must have an organized plan--one which everyone at all levels knows and understands, which is enforced fairly and evenly, and which carries with in the strong support of management at all levels.

11/30/2015

The concept of 'business ethics' is one of those terms which causes quite different reactions in different people--and not always for the same reasons. A recent article in Fast Company, the magazine of business management entrepreneurs, by David Meyer of the Ross School of Business at the University of Michigan seems to think so, and for good reason, as he aptly points out.

"Even before the financial crisis of the past decade, there were the Enron, WorldCom, and Tyco scandals. Before those, there was Gordon Gecko. And while the U.S. economy is finally recovering, the wealth disparity between rich and poor continues to yawn wider. Memories of Wall Street execs cutting themselves big bonuses right after being bailed out are still potent, and so is the popular impression that business and ethics just don't go together," says Meyer, in his introduction.

The sad thing is that he is RIGHT. People simply do not believe that business and ethics can truly go together, but they can, if proper safeguards, including the opportunity to act ethically, is enshrined in an organization. Unfortunately, that is often not the case in this rush to fame and fortune world we live in.

It's a great article, and very timely. If you don't have time to read the whole article, read the story at the start and see if that picture fits you as well.

11/24/2015

This is question that haunts every owner sooner or later., especially when faced with cutting costs in a downturn. Running a business is not easy--it is as simple as that. Making the wrong decision on how to proceed can be a disaster. But, there are things you can do to avoid that disaster--if you take the time to think them out carefully, and not, as the proverbial saying goes: "Put your mouth in motion before you put your mind in gear".

Lets look at both. Profit, the bottom line, is what determines if you will succeed and stay in business or go under. While you can continue to exist for a short time 'in the red', there is a point along your monthly financials that it becomes obvious, if you do not do something different, you will fail. That may mean reducing costs, either through finding cheaper suppliers, reducing employees, reducing benefits, or finding some investor willing to stick with you for a period of time, or even for the long term. All of these can reduce your costs against income.

Reducing costs against income may not achieve what you expect it to achieve--especially where your cost reductions affect the income. Let me give you several examples.

Would you, as an owner or a restaurant or small store, with several employees who are well-liked, competent, and bring in the customer base, reduce their hours, or replace them with less-costly employees?

Would you tell your supplier that you want to replace high-selling stock items with lesser cost items (Which may be already on your shelves but not selling well) and still expect that people will shop in your store?

Would you consider a 'bait-and-switch' situation where you promise something, and then claim the item(s) are not in stock, but you have higher-priced items available?

Would you tell employees to cut the quality level of your products? Take a deli that offers a broad selection of sliced meats. Would you tell your employees to slice thinner, getting more from the bulk item? Would you tell your employees to cut the amount of ingredients, on the hope that your customers simply do not notice?

The answers to the questions above will tell you how important you believe achieving your desired bottom line profit means to your overall outlook.

Then there is your reputation to consider. Look at the questions again, and this time consider if your customers find out that you are doing what is described, and they do not like what they see. if and when they do (And customers ALWAYS eventually find out what you have done), what will the knowledge do to your reputation? What will any damage to your reputation do to your income, and your bottom line?

Warren Buffett has said many times that creating a reputation takes years, but damage to it can ruin your reputation literally in minutes. It will take years to improve it, and former customers will eventually let everyone they know about what they have found. There is often a ripple effect here.

So, we return to the original question--What is more important, Profit or Reputation? I will argue the answer is BOTH. Planning and thought can design solutions that preserve your reputation, while improving your bottom line. i often tell my restaurant clients that reducing menu items, and, concurrently reducing inventory--while retaining the quality of base ingredients--produces results that please customers while reducing the variable costs. Instead of reducing employee hours, give them inducements to bring their customers in more often.

I buy a lot at Staples, as does anyone who needs office supplies. it might not be Staples itself, it might be another firm, but the occasional discount to bring in more business; the specials well down in price on brand name items, and the other little benefits of being a valued customer make it worth coming in a little more often, and thinking about them as soon as you realize you need something. At its heart, simple marketing "The personal touch" may be all it takes to improve income, reduce the costs squeeze, and maintain a good reputation.

Variable costs have variable solutions--it takes a bit of thinking, but it is worth the effort.

11/15/2015

We hear so much about leaders, but what really is a ‘Leader’? What are some of the attributes that set one person apart from others, in a position to exert influence or direction of others? Are there different kinds of leaders? Let’s take a brief look at some of the attributes of leaders, because the answer to one question leads to the answer to the other.

So how do we know a leader? Well, there are some common attributes, I believe at least, that mark a leader. These include:

Character , as Alexandre Havard, in his book Virtuous Leadership (Sceptre, 2007), describes the person with character as one who possesses, magnanimity, humility, prudence, courage, self-control, and justice. These virtues of a leader show a person who strives for great things, has the ability to stay the course in decisions—the right decisions, the ability to give every person their due and respect, and the ability to overcome selfishness and serve others consistently.

A sense of mission in their professional life. They are the trail blazers, the people who not only think ‘outside the box’, but they also work and act outside the box. Oftentimes, they are the creator of ‘the bigger box’, the broader and more challenging environment where success means hard work, but yields great personal and cooperative benefits.

An understanding of the challenges leaders face. Real leaders take the time to think through what they know they must do, how it will affect others, what risk is involved, and what their character tells them they should do, even in the face of potential backlash. In short, they do the RIGHT thing, for the RIGHT reason, at the RIGHT time, and willing accept consequences.

Setting high standards for themselves and others. Leaders work by example. In past centuries on the battlefield, senior leaders stood away from the direct battle, and simply ordered what was to be done. Some leaders—real leaders—such as Bonaparte, Stonewall Jackson, Robert E. Lee, George Armstrong Custer, to name a few. These men were at the lead, not rear, and their men followed them loyally, knowing the leader was just as invested in the outcome as the lowest soldier. They had faith in the leadership, and respect for authority, but most importantly they had a personal belief in their leader.

Leaders assume responsibility for their actions. A leader making decisions is the person responsible for results. When a leader holds back for altruistic reasons, rather than well-thought out decisions which a leader knows must be executed, or when a leader holds back out of fear for the consequences, that person ceases to be a leader. That person becomes a hindrance instead. Leaders who constantly blame others as an excuse for not leading aggressively themselves, are not true leaders.

Leaders take calculated risks. There is a degree of risk in any situation. There are risks simply walking across a public street, or walking down a flight of stairs. A leader does not refuse to take necessary steps because of the risks. Instead, the leader assesses the risk and determines, (1) to avoid the risk by altering the decision to achieve the result in another, less-risky way; (2) Accepting the risk and planning for potential adverse consequences; or, (3) Assessing the risk and determining that the risk is too severe to provide any potential benefit. The critical point is the leader assesses risk and makes decisions based on reality of the situation, and not on other altruistic concerns.

When leaders cannot lead, they need to find others who can do the job. In any organization, there will be others who, in particular circumstances, possess the unique skill set for a task at hand. Good leaders encourage and seek out these people, utilize and foster their skills, and bring them into the decision-making circles. That leads to the final attribute, which is:

Leaders are ready, willing, and able to share leadership with others. Good leaders recognize leadership in others, and make use of that leadership—improving the organization, and making the process of ‘blazing a trail’ to higher, sustained success more plausible and possible.

There are other attributes of leaders, and hopefully, some of you will discuss those in response to this brief piece.

11/09/2015

I recently read a great book by Alexandre Havard, entitled Virtuous Leadership", and it set me thinking on leadership style, and the effect of character on leadership. Havard's premise is a simple one: "Leadership is about character. No, leadership is character." In that simple statement, it easier to understand several of the major commercial debacles over the past few years, such as WorldCom, ENRON, and Madoff. it comes down to very simple premises; a real leader is one with character, ethics, and high standards.

Havard goes on to say, "The perpetrators of corporate wrongdoing invariably know that what they are doing is wrong. And yes, they do it anyway. This is a failure of character." We often wonder why these circumstances occur, and various causes are often attributed to them, ranging from greed, to outright lack of ethics. But is the lack of ethical standards all there is to it? I think not.

People perform because they feel the need to perform. Leaders lead because they feel the urge to provide their expertise to a situation where others have not stepped up to assume that leadership. But what about the person who steps up to lead who is unethical? What about the person who steps up out of a sense that they can make money, fame, or other type of fortune on the misfortunes of others? In my view, that person has a deficient character, as much as a deficiency in ethical standards. They will do things they would not do in personal surroundings, or in activities that affect themselves individually and personally.

It is good to believe that people have a natural tendency to do the right thing. Most people are brought up with a sense of ethical standards--however suspect they may be later. In reading over the years of politicians, mobsters, felons, etc., it seems clear that most started out with parents who wanted their child to succeed, and in a good way. As individuals, many led reasonable lives with their families, separating their 'business' ventures from their personal lives. That seems to be the crux of the issue here; is it possible to apply character and ethical standards differently in one's personal life and in their public life?

The answer to that question should invariably be NO. Again referring to Havard, he says, "Everybody has a mission, ...whether he/she knows it or not. A mission... is not something we invent or imagine. it is a specific calling to do a certain something, and in a specific way....Small minded men pass through life as through a tunnel, and with their 'tunnel vision', they see only themselves."

If we see that a person does things in their personal life at variance from what they do in their professional life, we usually want to now the reason why. here, I will argue that it is a case of deficient character--caused by rationalizing away that they can act differently in the professional world than they might in their personal life. They use rationalization because they do not have the courage of their upbringing and convictions to apply ethical principles consistently in their lives. Additionally, the lure of greed, ambition, and the need for acceptance are more powerful in the sterile surroundings of the boardroom than they might be in the living room of one's home.

Exceptional leaders know what they must do to succeed. In making that effort, they apply ethics, values, standards, and even common sense to devise a course to follow, and then perform in conformance with those principles. Anything short of ethical leadership is really a fraud.

10/31/2015

We have already seen that people usually makes decisions based on two things—free will, and experience. People usually react the way they have in the past, and according to how they have been taught over time. There are no secrets there. Assuming that people have been exposed to some level of rational and ethical thought, and decided that these precepts are ‘right’ for them, they will make decisions consistent with those precepts.

Individual decisions are generally less of a problem than group decisions. An individual who needs to decide something or take some action, will make that decision and move with it, whether it results in something positive or something negative—all involving their experience and their ethical upbringing.

Generally, people who lie and cheat see others in society do the same thing as others have done, but for whom those actions appear to bear no significant negative repercussions. This kind of view is sometimes called the ‘Bonnie & Clyde’ perspective, since people look to the antics of the two hoodlums and robbers as some kind of role model for doing adventurous, but dangerous things. They are willing to take their chances that either they will not be caught, or that the punishment will be lenient enough that their acts were worth their effort.

Each time this kind of activity occurs, others who observe the behavior feel that they can do similar things. It is appropriate for them, so they try to emulate their role models. If they also are not ‘caught’, it reinforces their feeling that that what they are doing is acceptable. Repetition without consequences can easily result in reinforcement of the view that what they are doing is really ‘acceptable’ instead of illegal or unethical, thus the Bonnie & Clyde Effect. Most of these kind of activities are individual in nature. Now, we need to move to community or collective decision-making, and see how that set of processes relates to the same free will and experience perspectives. At first glance, one might think that the same rules apply, the same potential misapplication of ethics and morality is in place, and many of the similar effects should occur. In fact, nothing could be more from the truth.

People working in groups think differently from those who can rely on independent thought. Individuals making independent decisions are responsible only for their own decisions. They can be held accountable for what they do as individuals.

In a sense, individual decisions are solely the result of ethical understanding and experience. People faced with decisions think about how they acted in the past, and whether or not those past decisions met the test of ethical acceptance. If the decision does meet that test then it can be executed without fear of possible reprisal. If it does not, the individual must decide how to either change the decision, or accept the potential consequences. Either way, these are personal decisions, impacted by their personal perspective, their personal ethical barometer, and their experience.

In a professional situation, the dilemma of how to act usually has a clear third dimension—the peer relationship. People tend to congregate with each other, learn from each other, and many adopt certain people within the firm as their role models—just as an individual might emulate some role model. However, the individual does not normally have that role model with them in person, contributing to their decision-making process. The corporate individual is part of a larger ‘community’ of some type, and needs to consider the views of others who may be contributing to a decision.

Within a corporate community, there are several influences which impact decision-making. Among them, we will discuss three which have, in my view, the most impact. First is the corporate authority figure; second, corporate culture; and third the corporate ‘ethos’. There is a considerable overlap among these three influences, and as shall see, their congruence is what really impacts decision-making.

Corporate authority is the ability within an organization to direct and/or influence actions in some specific way. It can be as simple as a supervisor directing a subordinate to perform work, and expect a specific result. It can also represent the pressure placed on an employee, a manager, or virtually anyone else in an organization by the rules enacted by the governing body, be it directors or senior executives. Corporate authority provides the formal direction expected, and provides a means for holding people accountable for their actions on behalf of the organization.

Corporate culture is the environment within which people work. More esoteric than formal authority, it consists of the expectations, the ‘unwritten rules’ by which people are expected to adhere to in working with their fellow employees, and the understanding of the boundaries within which each employee can perform their work. Culture ranges from the social expectations to the organization of the physical environment.

I once worked in a place where employees could have no family pictures on their desk—but a plant or two was perfectly OK. Management was subliminally trying to make the workplace pleasant, but at the same time separate from family life. They wanted employees to consider their fellow employees their ‘family at work’. Lots of group pictures of various employee section covered the walls, along with photos of award session and other company-related activities.

Decisions in a corporate culture are often made by teams or groups—where everyone has a voice, but some voices might be listened to with more diligence.

The ethos of the organization is its corporate soul. Ethos is defined (Oxford, WEB) as “The characteristic spirit of a culture, era, or community as manifested in its beliefs and aspirations.” As should be obvious here, there is an overlap between ethos and culture, but that overlap is not always easy to discern or understand. From the example above, both the ethos and culture of the company skew toward community ‘families’, and lessen the association with personal families. Ethos also tells the employee what is acceptable behavior in dealing with customers or clients and what is not. It can distinct in that respect from culture, in that the behavior with customers or clients—things external to the organization—may be quite different than relationships within the company.

Think about the Movie Wall Street , in which Gordon Gechko drives his employees to seek more and more business and wealth. He has a quite different approach with his employees professionally and socially, and an almost completely different sense of ethos when it comes to dealing with customers. In some ways, while ruthless throughout, he has a more paternalistic approach with the employees, while his ethical level in dealing with customers says in essence to ‘go get their money at all costs.’

The environment in the movie exhibits a distinct culture—a ruthless corporate culture, which says that people are there to make money—for themselves and for the firm—and that the firm takes care of those who produce and discards those who do not. The ethical standards, the beliefs, the ethos of the organization supports the culture, but goes much further in terms of lowering ethical standards when dealing with customers. Gechko’s bottom line, “Greed is Good”, describes well the interlacing of these two influencers.

In the next part, we talk about interactions, and the common space which organizes and rules the corporate environment from an ethical perspective.